Do presuit settlements count?
One of the hallmark victories for insurance companies and their policyholders in last year’s consumer insurance reform law SB 76 ended expensive one-way attorney fees in property insurance claims lawsuits. Now a policyholder of Citizens Insurance has filed a class action lawsuit, suggesting that Citizens owes her and thousands of other policyholders’ attorney fees for settlements reached prior to actual lawsuits being filed.
SB 76 requires a policyholder’s lawyer to file a 10-day presuit notice to an insurance company to give them an opportunity to re-evaluate the claim and settle it before an actual lawsuit is filed. The purpose is to reduce costly litigation and get the claim settled more quickly. But in Shanique Baker v. Citizens Property Insurance Corporation the homeowner’s lawyers, the Hernandez, Levy & Citron law firm of Hollywood, contend they are due fees for the work they did – even though no lawsuit was filed.
Citizens has filed a motion to dismiss the suit in Broward County Circuit Court, arguing SB 76 requires an actual suit be filed in order to determine attorney fees for either side. “Citizens offered a settlement, not only outside of a court of law, but entirely outside of litigation ever being commenced,” Citizens wrote in its motion. “Simply stated, a plaintiff cannot obtain a judgment without first filing (and prevailing in) a lawsuit.”
The plaintiff lawyers, who “believe there are thousands of people affected,” note the law requires the pre-suit notice should include a settlement demand with itemized costs and attorney fees, while not specifying clearly that insurance companies must pay attorney fees in disputes that don’t go to litigation. Citizens argues there is no ambiguity in the law.
LMA Newsletter of 3-14-22